Essay Questions - July 2003
MODEL ANSWER - QUESTION I - JULY 2003
PLEASE NOTE: QUESTION I was a
"Multistate Performance Test" (MPT) will not be answered here.
MODEL ANSWER - QUESTION II -JULY 2003
1. What are Ed's likely challenges in contesting the will and what facts support or refute these challenges?
Ed's challenge to Dennis' will is likely to be unsuccessful. While there are clearly benefits in retaining a lawyer to assist in the distribution of assets upon the death of the testator, there are no requirements that a will be drafted by a lawyer. Nor, is it required that all offspring share equally, or at all, in the distribution of the estate. What is required is that the will be properly signed by the decedent in the presence of three witnesses who also all sign as witnesses before each other. Notarization of the will is not required. The fact that this will was entirely in Dennis' own handwriting is not relevant to the issue of the validity of the will. Therefore, it appears that the necessary mechanics of the will were properly followed to uphold the Dennis' will in court.
The fact that the will is in Dennis' handwriting will be relevant to the issue of any claim of undue influence by Nancy to the benefit of Adam. While Adam does have a greater share in the estate than any of the other children, this alone would not be sufficient evidence of undue influence exerted by Nancy over Dennis on behalf of Adam. While Nancy's assisting Dennis in drafting the will could be sufficient evidence of "suspicious circumstances," the allegation of "destruction of free will" of the testator to the extent of him doing something contrary to his "true" desires, would likely not apply here, as the beneficiaries in this case are all children or grandchildren of the testator and the alleged wrongdoer, Nancy is not a direct beneficiaries of the will. See In re Estate of Rotax, 159 Vt. 390 (1981)."
The fact that Dennis was unduly tired is of concern in determining if Dennis had sufficient mental capacity to enter into the will. However, the expected testimony of Nancy, Ned and Neil, that Dennis understood what he was doing at the time, should be sufficient to overcome any concern herein.
The fact that one of the children, Frieda, is not mentioned at all in the will is more likely to be a problem in this matter, given Nancy's unfavorable relationship with Frieda. Frieda's decision to not join Ed in contesting the will should have no impact on the challenge to the validity of the will. Frieda may be a witness to the contest relative to her father's "true" desires relating to the claim of undue influence and her decision not to join in the contest may have some bearing on her credibility, but it should not otherwise affect the decision as to the validity of the will. It is not a contest to see how many children or siblings agree with the testator's desires in distributing his assets upon his death, but only if the will has been validly formed and if any undue influence existed to rob Dennis of his free will in disposing of his assets upon his death.
The fact that Nancy is a trustee of the hospital to whom Dennis has left a small bequest is of minor concern in this matter. Nancy will not directly benefit from this bequest. Also, given its small monetary value there is less likelihood of undue influence being successfully claimed herein. However, this cumulative evidence of Nancy's influence on Dennis is a matter for close consideration in determining the validity of the will. If Nancy is found not to be a disinterested witness to the will, then the entire will would fail for lack of a sufficient number of disinterested witnesses.
2. Who has the burden of proof on each of Ed's challenges?
Once the proponent of the will shows that execution formalities were complied with, the burden of proof as to the capacity of the testator would shift to Ed. If "suspicious circumstances" were demonstrated as a result of Nancy and Ned's actions in this matter, this would, in turn, cause the burden of proof to shift again from Ed to the proponents of the will, here Adam, Bill and John.
3. If Ed succeeds in his challenge, what, if anything, will Frieda receive?
If Ed's challenge is ultimately successful, then Frieda would be entitled to a share of the estate as if her father had died intestate; here a 1/5th (20%) share of the estate. Note that Bill's son John would lose his share of the inheritance if the will is successfully challenged. If Ed wins, Frieda receives her intestate share regardless of whether she actively litigates the claim or not. However, because she was not named in the will, Frieda does not need to join Ed in contesting this will in order for her to assert her share in the estate.
4. What consequences, if any, result to the hospital if it fails to enter an appearance in the litigation?
The hospital is not required to have an attorney enter an appearance in this matter and represent its interests. There is no default danger to the hospital for failing to attend any will contest. If the will is valid and not the result of undue influence, the hospital will receive the remainder interest in the estate regardless of whether it has entered an appearance in the litigation. Similarly, if the will is found to be invalid, it will lose its remainder interest in the estate regardless of whether it is represented in the litigation. Given the small monetary value of the remainder interest and the potential expense in retaining legal counsel to represent its interests in this matter, it may not be financially viable for the hospital to retain counsel and formally appear in this matter.
MODEL ANSWER - QUESTION III - JULY 2003
1. Patricia will not be able to sue OCS. The Vermont Supreme Court recently confirmed its earlier ruling that OCS's child support collection duties are uniquely governmental functions. As such, the doctrine of sovereign immunity bars suits against the agency based on its collection duties. Powers v. OCS, 2000-335 (2001); Noble v. Office of Child Support, 168 Vt. 349, 721 A.2d 121 (1998). Instead of suing OCS, Patricia should seek to enforce the child support award through court proceedings. A court can order various forms of relief, including garnishing Dan's wages, or even holding him in contempt for failure to pay the child support. Finally, if Dan holds any professional license or has a contract with a state agency, these may be jeopardized by his failure to pay support.
2. Patricia may have a claim based on the Court's award of spousal support. In Gulian v. Gulian, 99-207 (2000), the Family Court ordered spousal support to continue until the parties' youngest child turned 18. In reversing the lower court the Supreme Court recognized that the purposes of maintenance are both rehabilitation and compensation. The Court held that the decision to tie the duration of mother's award to the age of majority of her youngest children was an abuse of discretion. There was no evidence that the duration of the award would either adequately compensate mother for her contributions to the fourteen year marriage or maintain her at the marital standard of living for a sufficient period.
In making a spousal support award the family court should have first considered whether Patricia lacked sufficient income, property or both to provide for her reasonable needs. The court should also have considered whether Patricia was unable to support herself through employment at the standard of living established during the marriage or whether she was to be custodian of the children. Assuming Patricia met those threshold requirements, the court should have weighed the following factors to determine an appropriate amount and duration for the award: Patricia's financial resources including property apportioned to her, her ability to meet her needs independently, the extent to which a provision for support of the children contains a sum for Patrica as custodian, the time and expense necessary to obtain appropriate employment, the standard of living of the marriage, the duration of the marriage, the age and health of each spouse, the ability to Dan to meet his own reasonable needs and inflation with relation to the cost of living.
Patricia should have a strong argument in an appeal to the Vermont Supreme Court that the Court's award, terminating her spousal support when her children reach age 18, was an abuse of discretion.
3. Effective January 1, 2003, new Rule 4(r) of the Vermont Family Rules allows the court to appoint a master to determine certain property issues. The master may determine property values, amounts of income and living expenses in cases where equitable division of the marital estate or spousal maintenance are at issue. With the agreement of the parties, the master may also determine the fair allocation of property and an award of spousal maintenance. As Patricia did not agree to have the master determine the property allocation, the judge erred in ordering it. She may be able to have the order overturned as a result.
to the allocation of property the Master should have relied on twelve
As to the allocation of property the Master should have relied on twelve statutory factors:
Patricia may have additional grounds for appeal if the award was not equitable taking into account the above factors.
4. Patricia may also have an appeal based on the grandparent visitation award. In Glidden v. Conley, 2000-491 (2001), the Vermont Supreme Court held that grandparent visitation must be left to the discretion of a fit parent. In other words, unless a parent is unfit they are entitled to unfettered decision-making in the best interests of their children, including when and under what circumstances the children visit with their grandparents. In so holding the Court recognized the United States Supreme Court decision in Troxel v. Granville, 530 U.S. 57 (2000). That decision confirmed that a fit parent has a fourteenth amendment right to be free from state interference in their child rearing decisions.
5. The Court can only modify parental rights and responsibilities in limited circumstances. The party seeking modification must show, as a threshold requirement, that there has been a real, substantial and unanticipated change of circumstances. If that threshold is met, the party must show that, given the change, modification would be in the children's best interest. The "best interest" factors include the relationship of each parent with the children and the parent's ability to provide love, affection and guidance, the ability and disposition of each parent to provide adequate food, clothing, medical care, other material needs and a safe environment, the ability and disposition of each parent to meet the child's present and future developmental needs, the quality of the child's adjustment to present housing, school and community and the potential effect of any change, the ability and disposition of each parent to foster a positive relationship with the other parent, the quality of the child's relationship with the primary care provider, if appropriate given the child's age and development, the relationship of the child with other significant people and, if parental rights and responsibilities are to be shared, the ability and disposition of the parent to communicate, cooperate and make joint decisions. Finally, the court must consider evidence of abuse.
The Court favors stability for children and will not easily change custody. In a 2001 decision, Meyer v. Meyer, 2000-420, the Vermont Supreme Court did affirm a change of custody in a case where the parties disagreed on just about every major issue and the continuing stress was having an adverse impact on the children. Prior to Meyer the Court had declined to uphold a change based on the parties' continued antagonism after the divorce. See Gates v. Gates, 168 Vt. 64 (1998). In Meyer the Court distinguished the Gates holding finding that the situation in Meyer had changed dramatically in that the parties had previously been able to cooperate. It is possible, given Meyer , that the Court would find a change of circumstances in Patricia's case. She should be prepared to argue that it continues to be in the children's best interest to be with her.
MODEL ANSWER - QUESTION IV - JULY 2003
1. Prior to the 1976 straw transfer, Annette and Alfred owned the camp as tenants by the entirety. With the 1976 transfer Annette, Alfred and Barbara became joint tenants with rights of survivorship. In a joint tenancy, each tenant owns an undivided share in the whole estate by the share and also by the whole ("per my et per tout"). When Alfred died, his interest passed by survivorship to Annette and Barbara who remained joint tenants with rights of survivorship. If Annette's conveyance to Bill two weeks later was effective, that severed Annette's joint tenancy with Barbara, who then owned an undivided one half interest in the camp as a tenant in common with Annette and Bill, who together owned the other undivided one half interest as joint tenants with rights of survivorship. When Annette died Bill acquired Annette's interest because he survived Annette, and he and Barbara became tenants in common, each owning an undivided one half interest in the camp. Therefore, Bill could claim an undivided one half interest in the camp.
2. A transfer of title to real estate requires execution and delivery by the grantor, and acceptance by the grantee, of a deed to the property. Annette never made a physical delivery of the deed to Bill and Bill never accepted delivery of the deed from Annette, so arguably there was no conveyance to him, in which case he never obtained any interest in the camp. Elmore v. Marks, 39 Vt. 538 (1867). The fact that a deed is on record, even if recorded by the grantor's direction, is only prima facie evidence of delivery, which may be rebutted. Rich v. Wry, 110 Vt. 307 (1939). "A deed does not take effect until it is delivered. To constitute delivery of a deed the grantor must part with the custody and control of the instrument permanently, with the intention of having it take effect as a transfer of title, and must part with his right to the instrument as well as with the possession of it." Bove's Executor v. Bove, 116 Vt. 76, 86 (1950). However, Annette subsequently told Bill about the deed and he didn't refuse or object, and Barbara gave the deed to Bill after Annette's death. One or both events may have been a constructive delivery and acceptance sufficient to support the transfer. "The prime requisites of such acceptance, in the legal sense, are the grantee's knowledge of such delivery or tender, an intention to take the legal title to the property which the deed purports to convey, and the manifestation of such intention by some act, conduct, or declaration." C. R. McCorkle, Annotation, What Constitutes Acceptance of Deed by Grantee, 74 A.L.R.2d 992. A modern court would probably find an effective delivery and acceptance of the deed in this case. See, e.g., Worth County v. Jorgenson, 253 N.W.2d 575 (Iowa 1977) (law presumes acceptance when the grantee is unaware of grant where grant is beneficial and not onerous).
3. Bill's acquisition of title by surviving Annette is treated for federal tax purposes as if he inherited his interest under Annette's will. Treasury Regulation § 1.1014-2(b). That principle also applies to property acquired or sold as a result of a compromise of a dispute among heirs. Lyeth v. Hoey, 305 U.S. 188 (1938) (property received by heir as a result of compromise of will contest is "acquired by inheritance"). Bill's basis in the camp is "stepped up" to the value of Annette's interest in the camp on the date of Annette's death, or $100,000. Bill has a $20,000 capital loss before sale expenses.
4. A Vermont land gains tax return must be filed for any transfer of real estate held by the transferor for fewer than six full years. Bill's basis is not determined by reference to Annette's basis, but rather with reference to the value of the land on the date Annette died, so Bill's basis and his holding period begin with Annette's death, or in 1999. His holding period is fewer than six years and so a land gains tax return must be filed.
MODEL ANSWER - QUESTION V - JULY 2003
1. Please describe the differences between a limited partnership, a limited liability company and an S corporation.
In order to determine the proper choice of business entity in Vermont, a lawyer must have knowledge about specific aspects of a potential business such as the formation, operational, financial, tax and ownership considerations of the business.
Must file articles of incorporation
with the secretary of state's office
Ltd. Partnership: Must file limited partnership certificate with secretary of state's office
LLC: Must file articles of organization with secretary of state's office.
S Corp. may only have one class of
Ltd. partnership: Can contribute cash, services or other property
LLC: contributions may consist of tangible or intangible property & may include cash, property or contracts for services to be performed. Members acquire a distributional interest not a transferable interest in the LLC
LLC: May be member managed or manager
managed. More flexibility than corps.
Ltd. partnership: Has both general and limited partners but only the general partners may participate in the management of partnership.
S Corp.: Bus. and affairs of the corporation are managed under the board of directors subject to any limitations set forth in the articles of incorporation. Directors adopt by-laws for managing and regulating the business of the corp. Must have at least a president and secretary.
Ltd. partnership: must include at
least one general partner with unlimited liability. A limited partner's
liability is limited to their contribution to the partnership.
LLC: The debts, obligations and liabilities are solely those of the co.
S Corp.: Limited owner liability
Tax treatment: LLC:
pass through tax treatment
S Corp.: Taxed like a partnership
Limited partnership: Pass through tax treatment
2. Please describe the type of business organization, if any, they were operating under on the store's opening day. Please discuss the respective roles of Alan, Bill, Carol and David in that organization.
Alan, Bill and Carol were operating as a general partnership on the store's opening day as there was no formal action taken to establish the limited partnership or any other business entity. Most other types of business organizations can only be formed through a formal vote or action by the owners of the business, and appropriate documents must be filed with the secretary of state's office (see answer to 1 above). In order to establish a general partnership, however, they just need to begin operating the business and working together. Alan, Bill and Carol were participating in the management, providing their services and agreed that they would all receive a share of the business' profits and therefore, were acting as general partners would. Although Carol claimed she did not want to participate in the management, and she did not participate other than providing help in finding the location and signing the lease she is still treated as a general partner, primarily because she is receiving a share of the profits for in return for her contribution. David contributed cash as an investor at a fixed interest rate and had no other management or control so he would be considered to be a creditor of the partnership only.
3. Please discuss the potential individual liability, if any, of Alan, Bill, Carol and David for Ellen's tort claim.
Bill, Carol & David are all jointly and severally liable for the acts of the partnership as they were operating as a general partnership. See 11 V.S.A. §3226. All three can be sued in the name of the partnership and if Ellen is successful, she can recover the assets of the partnership. All three can also be sued individually since their liability is not shielded by the partnership as an entity. If Ellen is successful against the partners individually she can attack their respective individual assets. Davis has no liability as to Ellen as he is a creditor of the partnership, although if the partnership is successfully sued, he may lose the amount he loaned the partnership.
4. For this question only, assume that a limited partnership had been properly formed before they leased the store. Please discuss the responsibility of Alan, Bill, Carol and David for the payment of rent.
If a limited partnership had been properly formed, Alan and Bill are likely to be general partners, as they are participating in the management and control of the business. As general partners, they are liable for the payment of the rent. David is likely to be considered a creditor (as discussed in the answer to question 2) of the partnership, and therefore has no liability for rent. Carol's position is likely that of a limited partner because she did not want to be involved in the management of the business, but did want a share of the profits. As a limited partner, she is not liable for the rent (although both Carol and David may lose their initial investments in the business). However, the fact that Carol found the storefront and signed the lease raises the possibility that she may be found liable for the rent despite the fact she is a limited partner. Nonetheless, limit partners are allowed to engage in certain activities without jeopardizing their status as a limited partner (see 11 V.S.A. sec. 3423(b) for a list of activities that a limited partner can engage in without being in control of the business). It's likely that Carol will not be personally responsible for the rent.
MODEL ANSWER - QUESTION VI - JULY 2003
1. Brad's conduct complies with the requirements of Rule 7.3, which governs contact with prospective clients. Pill contacted Julia by letter, rather than in-person or by phone, both of which are prohibited by Rule 7.3(a). As described here, the letter meets the requirements of Rule 7.3(b). Julia has not informed Brad that she does not want to be solicited. Brad's letter is a polite solicitation and does not involve coercion, duress, or harassment. Because Brad had no prior relationship with Julia, and knew that she was in need of legal services, he also had to comply with Rule 7.3(c). He met this requirement by including the references to "Advertising Material" on the letter and envelope. Brad's reference to his "significant experience" is truthful and complies with Rule 7.4, which allows lawyers to state that they practice in particular areas of law. Brad has not indicated that he is recognized or certified as a specialist in any are of law, a form of advertising that is strictly limited by Rule 7.4.
2. Brad has probably not violated the rules governing fee arrangements with clients. As required by Rule 1.5(b), he explained his fee arrangement within a reasonable time after commencing the representation – here, during the first meeting with the client. He provided a written fee agreement, as recommended by Rule 1.5(b). Brad's fee is high, but it appears to meet the requirement of "reasonableness" set forth in Rule 1.5(a). Rule 1.5(a) lists several factors that are relevant to determining whether a fee is reasonable, including the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal services properly, the customary fee in the locality for similar legal services, and the experience, reputation, and ability of the lawyer performing the services. Assuming that Brad relied upon some or all of these factors when he gave his reasons to Julia for his charge, his higher than usual percentage is probably not unreasonable. Brad's discussion of these issues with the client and his disclosure of the fact that other attorneys might charge a lower fee further support the reasonableness of the fee agreement.
3. Brad's offer to advance the court costs and expenses of litigation complies Rule 1.8, which governs financial transactions with clients. Generally, an attorney may not provide financial assistance to a client in connection with pending or contemplated litigation. Rule 1.8(e). The rule contains an exception, however, for advancing court costs and expenses of litigation, including the costs of a medical examination. Rule 1.8(e)(1). The rule also permits repayment of these costs to "be contingent on the outcome of the matter." Rule 1.8(e)(1). Brad does appear to have failed to clarify the treatment of expenses of litigation when he finalized the fee agreement, as required by Rule 1.5(c).
4. Brad's request to Julia's mother did not violate an ethical rule. Rule 3.4, fairness to opposing party and counsel, governs this matter. The Rule does generally prohibit a lawyer from asking a person, other than a client, to refrain from voluntarily giving relevant information to another party in a civil case. Rule 3.4(f). This situation, however, fits within the exception to the Rule. The exception applies where (1) the person is relative, employee, or other agent of a client, and (2) the lawyer reasonably believes that the person's interests will not be adversely affected by refraining from giving the information. Julia's mother is obviously her relative, and Brad could reasonably conclude that the mother's interests would not be adversely affected. Brad did not ask Julia's mother to lie or to avoid compliance with a lawful subpoena. However, Brad should keep in mind Julia's apparently improving situation as the litigation proceeds in order to ensure that he does not violate Rule 3.3, which requires candor towards the tribunal.
Board of Bar Examiners
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